Suppose the Government Decides to Create a Ceiling on the Price

question 70

Multiple Choice

Suppose the government decides to create a ceiling on the price of gasoline, which of the following is not likely to be true under the described circumstances?

• A)The ceiling will have no effect if the ceiling is above the equilibrium market price.
• B)Producer surplus will likely increase if the ceiling is below the equilibrium market price.
• C)Producer surplus will be lower with a binding ceiling (below the initial market equilibrium price).
• D)The ceiling will lead to shortages if the ceiling is below the initial market price.

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Definitions:

Phallic-Stage Boy

A term from Freudian psychoanalysis referring to a developmental stage in boys, roughly ages 3 to 6, focused on genital fixation and identification with the same-sex parent.

Castration Anxiety

In Freudian theory, the belief that the father will cut off the child’s penis because of competition for the mother/wife.

Sigmund Freud

An Austrian neurologist who is known as the founding father of psychoanalysis, a method for treating psychological pathology by means of dialogue between the patient and a psychoanalyst.

Phallic Stage

In Freudian theory, the period from age 3 through 5, during which both male and female children exhibit interest in the genitals.